NEW DELHI– The Indian rupee strengthened for a second consecutive session on Monday, rebounding from recent record lows amid continued intervention by the Reserve Bank of India.
The currency opened 24 paise higher at 89.41 against the U.S. dollar, compared with its previous close of 89.65 on December 19.
Market participants said volatility remains a key concern, with the rupee’s near-term direction dependent on sustained central bank intervention and movements in the global dollar.
Analysts said the 89.20 level has emerged as a critical support zone. A sustained break below this level could open the way for further appreciation toward the 88.50–88.30 range in the near term.
The rupee’s recovery has been supported by an improvement in India’s external position, including a narrowing trade deficit in November and foreign portfolio investors turning buyers of Indian equities while selling dollars.
On Friday, the rupee posted a sharp 0.67 percent gain in a single session, briefly moving past the psychologically important 90-mark before settling lower. It still ended the day as the best-performing currency among its Asian peers.
In November, persistent foreign institutional investor selling pressured the rupee, even as domestic inflows supported equity markets and bond yields hardened.
India’s external balance improved as the merchandise trade deficit narrowed to $24.5 billion in November from a steep $42 billion deficit in October, while a steady services surplus continued to cushion the overall balance.
Foreign portfolio investors were net sellers in nine of the 11 trading sessions so far in December, adding to currency volatility.
Analysts said the rupee could remain choppy until greater clarity emerges on India’s trade negotiations with the United States, potentially by March 2026. They added that RBI spot market interventions, activity in the forwards segment, and foreign capital flows remain key drivers of day-to-day currency movements. (Source: IANS)
